The US government’s green car program has been under scrutiny with the recent failure of two of the companies that received the loan, including coverage of a $US675 million lawsuit by an inventor claiming he was denied funding for his inflatable electric car company because of politics. What hasn’t gotten much scrutiny is the unsuccessful serial inventor behind the lawsuit.
Pretend you’re the US Department of Energy for a moment. Your job is to hand out billions in taxpayer-funded loans to companies who want to produce green cars. An entrepreneur comes to you seeking $US40 million to develop an electric car made out of an inflatable polymer foam instead of metal. Would you do it?
This is exactly what Scott Redmond, CEO of now-dissolved California startup XP Vehicles, did in 2008. The Energy Department turned down his request, and now Redmond has filed two lawsuits in the US Court of Federal Claims and U.S. District Court against the government seeking a combined $US675 million in damages.
Their lawsuit continues to move through the federal courts, and in late April the Energy Department asked a judge to dismiss the case.
But until now, no one’s coverage of the suit has appeared to mention that Redmond is a serial entrepreneur with a 20-year history of building hype and then getting funding for unrealistic tech ventures that never go anywhere.
XP Vehicles appears to be one of them, as does his other venture Limnia, which he said was to manufacture batteries for the cars.
Still, what makes Redmond’s lawsuit interesting is his claim that he was turned down because his company lacked ties to the Obama administration and several Democratic elected officials. He claims that the Advanced Technology Vehicles Manufacturing program was compromised by political bias at the top, and that the car was turned down because they weren’t connected to the right Democrats like people involved with Tesla and Fisker were.
XP was hardly the only company turned down for an Advanced Technology Vehicles Manufacturing loan. Scores of startups jumped at the chance to apply for the loans, but only five companies — Ford, Nissan, Tesla, Fisker and the Vehicle Production Group — were awarded any money.
Those five received a combined $US8 billion between the five of them, with Ford and Nissan getting the lion’s share. The program has received a great deal of scrutiny as of late with the failure of Fisker and now also VPG, since there are doubts as to whether those companies will be able to pay their loans back.
Compared to those companies, however, Redmond’s proposed car was far more questionable, and his claims about its feasibility are in line with other bizarre statements he has made online in the past.
But does his claim that ATVM’s loans were awarded based on politics hold any water?
The Inflatable Car
The ATVM program was first established in 2007 with strong bipartisan support in Congress. The goal was to help American manufacturers develop the next generation of fuel-efficient automobiles and add thousands of new jobs across the country.
According to their lawsuit, XP Vehicles pitched an SUV concept to the Energy Department in late 2008 that would be driven by easily-swappable batteries running motors in the rear wheels and ultimately cost less than $US20,000. They said they and Limnia had been working on the technology behind the car since the early 2000s along with the government-run Sandia National Laboratory. They said in the lawsuit that they offered the Energy Department $US100 million in independently-verified collateral as security for the loan.
Here’s the real kicker. They said the four-seat SUV, which looked like an elongated Smart car, would weigh a mere 635 kilos but would be as safe as any car on the market. It would supposedly pull this off by being an “inflatable” car — the car was made from a flexible polymer foam material.
XP’s argument was that since the technology had already been developed for use in boating equipment, and perhaps most famously, on the Mars rover’s landing system, all they had to do was apply it to the automotive world.
It’s not the first time they had pushed for this technology to be used on a car. Previously, XP had floated concept drawings for a small, sub-$US5000 electric sports car for the southeast Asian markets they called the “Whisper.”
It would supposedly use the same inflatable foam technology to create a car they claimed was essentially made of airbags, safe enough to drive off an 8m cliff without injury. Oh, and they said the Whisper could go a staggering 4000km on a single electric charge.
The inflatable Whisper seemed to be mostly hot air, but XP got somewhat more realistic with their SUV, and that’s what they pitched to the Energy Department. They say it would have the best power-to-weight ratio of any car on earth, and it would be capable of running 201km on a single electric charge — all while carrying passengers around in total safety and comfort in an inflatable body that rides on skinny bicycle-like tyres. (For his part, Redmond denies that the car was “inflatable,” though his company described it that way in earlier news releases.)
For years, the car made the rounds on various tech and automotive websites, only occasionally with a hint of skepticism. But when we’re talking about a car company that can be realistically developed, built, brought to market and then sold to a wide audience of consumers, doesn’t it sound far-fetched?
It’s all par for the course for Scott Redmond.
Is This Thing For Real?
At the 2011 Consumer Electronics Showcase in Las Vegas, Redmond unveiled what was at the time one of his latest ventures known as Peep Wireless, a service that promised free phone calls and mobile Internet.
As is common in the world of tech journalism, early coverage was enthusiastic and hardly questioning (although CNET described the company as less of a startup and more of a “psychotic” Bell Labs.) But then Gizmodo explored the fact that the Peep Wireless technology was essentially impossible, and then went through a number of Redmond’s other ventures that never panned out in any way. Here’s what they said in their story, “The Greatest Scam in Tech“:
The pattern is easy to pick out: This dude shows up whenever there’s a bubble or hot trend in the tech business world that has yet to make it to the marketplace. Then he strings together a bunch of technical jargon that hardly informs what he’s doing, and presumably gets some kind of funding. After that, he generally forms not one but two companies around said bubble. (Peep Telephony has Peep Wireless; Limnia, a fuel cell company, Fuel Sell; Clever Homes, FabModern). All the companies are listed at the same address in San Francisco.
Ultimately, the companies just disappear, legacies reduced to comically vague blurbs on Redmond’s resume — if that. There’s no point trying to ascribe motives to what Redmond does, and we don’t want to make this about character or intent. Point is, these ventures rarely — if ever — work. And through the harsh lens of hindsight, some look like they weren’t ever meant to.
Redmond wasn’t happy about that story, although he and Peep Wireless never returned requests for comment until after it was published. Even when Gizmodo published Redmond’s rebuttals on top of their original story, he still filed a libel lawsuit.
He was not successful. A judge dismissed the suit in August.
Gizmodo’s story even mentions “an inflatable car” and Limnia, about which Redmond said that government funds were in negotiation. That would be XP Vehicles. And like Redmond’s other ventures, there’s not much evidence to suggest that the car was anything more than a product of his imagination.
Redmond has made some other unusual claims on his various personal blogs and websites, including that he patented an “electric propulsion” system used by the ships in The Matrix, that he had patents on touch-screen phones before Apple did, and that he invented virtual reality and a graphical interface for the Internet.
Even his own website, which promises “strategic innovation” consulting, lists numerous projects but offers very few details as to whether they were ever actually commercialised or completed. His Twitter account is the same thing: mostly links to photos of supposed projects on his Facebook page without real proof of their existence.
His XP Vehicles obviously wasn’t the only car company to get turned down for a government loan. Carbon Motors’ BMW diesel police car was rejected, as was Aptera Motors’ ultra-aerodynamic three-wheeler, and hybrid vans made by Bright Automotive. But those companies had working prototypes by the time they applied for Energy Department assistence; the buff books even drove some of them.
But besides some patent filings and some extremely unconvincing mockups of the car — which appear to be such a blatant Smart car knockoff it would make a Chinese automaker blush — XP does not appear to have had a whole lot. Most of the images of the XP SUV (and the Whisper, for that matter) seem to have been made with simplistic, shimmery computer graphics that would have looked dated on a Nintendo 64 game.
These days, there’s little to be found of what was once XP Vehicles online. Their website is divided into two sections, one where you can supposedly purchase custom-ordered cars and parts from a company called Exclaim Automotive Services that has licensed XP’s technology, and the other is devoted to how XP supposedly got screwed over by the government.
It’s the same story with Limnia. When searching around the Internet, it’s nearly impossible to find any examples of things Limnia has actually done besides write press releases, secure patents, and file lawsuits. They do have a video that shows off what they claim is an energy storage and distribution system hooked up to a non-moving Prius, but it’s hard to tell exactly what it does, if anything.
When Jalopnik asked XP Vehicles for comment about these issues, we received this response:
Scott Redmond sued Gawker, which runs Jalopnik, and is assisting federal law enforcement with their investigation of Gawker regarding the hired hit on Mr. Redmond By Gawker and is unable to comment at this time.
Gawker Media is not under federal investigation for a “hired hit on Mr. Redmond.”
It’s hard to believe that anyone ever considered the XP SUV to be a viable concept based on all of this, and so it seems fitting that the company was turned down for a taxpayer-backed loan.
But why exactly was XP denied the funding? According to their lawsuit, that depends on who you ask and when.
In their lawsuit, XP says that the denial of their loans came as a shocking surprise after months of dealing with the Energy Department. During that time, they say government officials assured them things were going fine and that XP met the criteria for a loan.
XP was turned down in August 2009. According to exhibits filed with their lawsuit, in the first rejection letter they received, ATVM director Lachlan Seward told the company that the department could only choose “applications that are most likely to use the limited loan proceeds in a way that will best achieve the goals of the program.” That was all the explanation they got.
Seeking further clarification, XP says in their lawsuit that they called Energy Department official Chris Foster, who told them told them they were denied because their car was not designed for government fleet sales, was “too futuristic” for commercial use, that it was a “hydrogen vehicle” and did not run on E85 ethanol as they said was required for a loan.
If true, these are curious reasons for a denial. After all, XP’s vehicle supposedly ran on electricity, not hydrogen, and how much E85 ethanol does one of Tesla’s cars use?
XP discounts each of the government’s claims in their suit. They say Seward wrote them a letter with contradictory reasons about why the car was turned down, saying their proposal seemed not ready for commercialization and production within three years, calling their design “high risk” and “far too early in the development process to qualify.”
XP disputes that by saying their technology was already in use in other applications, including cars and the retail market. They also claim they were at least as far along as Tesla and Fisker, although XP seems to have lacked a concept or even a prototype car.
As for battery maker Limnia, the lawsuit claims they were denied because Seward said their components did not appear to be designed for use in an “advanced technology” vehicle. Limnia was also turned down for a separate DOE loan for failing to pay the $US18,750 application fee, which they claim Energy Secretary Steven Chu agreed to waive in a conference call — a promise they say he later reneged on.
In the Energy Department’s response to the lawsuit in which they asked a judge to dismiss, attorneys said Limnia’s application remains under review, so they have no grounds for a lawsuit. In addition, they said that as a dissolved corporation under California law, XP Vehicles is not eligible for the relief they seek in the suit.
According to XP’s lawsuit, the real reason the company never received the funding they say they deserved wasn’t because little proof exists that Redmond’s car was anything more than fantasy.
It was politics — specifically, that Energy Department money was set aside for those with the right connections to the right Democrats like Tesla and Fisker had. (Citing the ongoing litigation, an Energy Department spokesman declined to comment for this story.)
“…the taxpayer-funded ATVM Loan Program and LGP became cash cows for government cronies,” the lawsuit reads. “Politics and political pressure infected these programs, shaping, in whole or in part, the judgment of the agency’s ultimate decision makers.”
In particular, the XP lawsuit points to Steven Westly, a venture capitalist and onetime Democratic contender for governor of California who sat on the Tesla Motors board during the time the company received its $US465 million loan. Westly was also a high-dollar fundraiser, or “bundler” in political parlance, for President Obama’s reelection campaign.
On the Fisker side of things, the lawsuit says, there was venture capitalist and former “undisputed king of Silicon Valley” John Doerr. His firm Kleiner Perkins Caufield & Byers raised $US1.4 billion in private investments for Fisker; former Vice President Al Gore is a partner at that firm, and Doerr himself has donated heavily to Democrats including Obama, former Connecticut Sen. Chris Dodd, New York Sen. Kirsten Gillibrand and others, according to a search of Federal Election Commission records.
XP’s lawsuit nails Fisker and Tesla for not hitting their performance targets. Although that’s somewhat less true of Tesla now, what with them having posted their first quarterly profit and generally receiving rave reviews.
It is the case with recently-failed Fisker, which, as the lawsuit (and the Congressman who took Henrik Fisker behind the woodshed in April) notes, received a commitment of $US359 million from the government to develop the car that came to be known as the Atlantic even though no prototype had been shown to the public and the Karma had not completely gotten off the ground.
(The lawsuit also alleges that XP and Limnia technology was hijacked by the Energy Department and shared with “government cronies” General Motors and Ford, although their supposed proof appears more anecdotal than anything else.)
XP Vehicles themselves have become more political as well, having hired Washington-based nonpartisan watchdog group Cause of Action to represent them in the suit. The group, according to Fox News, has been linked to conservative issues in the past.
Do Fisker and Tesla’s connections to powerful Democrats prove beyond a doubt that the ATVM process was compromised politically? It’s not unreasonable to assume that wealthy people, venture capitalists or not, would donate to political candidates.
But it certainly looks bad, if on the surface if nothing else. It makes the loan process seem like “Washington politics as usual” at best, and outright government corruption and cronyism at worst.
This isn’t the first time the ATVM program has been accused of being swayed by politics. The allegation was repeated by members of Congress when they called Fisker to the carpet in hearing last month.
However, given Scott Redmond’s track record, it is hard to believe that XP Vehicles and Limnia could have ever actually put a car together had they been granted the loan money. And while Redmond claims the Energy Department was contradictory in their claims about why XP was turned down, the letter from Seward does say their technology was considered too risky.
The ATVM program, for its many faults, could have been in even more trouble had they loaned Redmond the money.
Who knows? Maybe he’ll win his $US675 million and the world will get an inflatable car after all.
Graphic: Jason Torchinsky
Republished from Jalopnik.